Maersk: Purpose of 'Triple Es' is to make money, not cut rates

Friday, April 19, 2013

Nils Andersen, chief executive officer of the A.P. Moller-Maersk Group, said while the 20 “Triple E” containerships that the company is building will result in a big infusion of capacity in the Asia-Europe trade “we will put them in over a prolonged period and we will take out a number of vessels in other categories, smaller less efficient vessels, and take them into other trades so we will not add capacity.”He made his remarks on NBC television. The Maersk executive was in New York to ring the opening bell for the NASDAQ exchange where the company’s stock is listed and to meet investors.
Andersen said “this is not the optimal time to be putting in capacity,” but observed “trade, of course, is very big from Asia to Europe, also Asia to the U.S. and what we are talking about is maybe a little slower growth, but of course this business is a growth business in general.”

Andersen

When asked if the economies of scale of the new, 18,000-TEU ships “are so large that they are lethal to your competition,” allowing Maersk to undercut other shipping lines, Andersen replied “we have to be realistic—these vessels are a very, very small part of the global fleet and they are not going to change the price picture as such.
“We’ve not put them in to reduce rates, we put them in to make more money and also cut the consumption of fuel and reduce CO2. So when we designed them they were part of our CO2 emission reduction program. They do a lot of good to the world economy,” he said.
Further asked about trends in global trade, Andersen said there was significant growth last year in trade from Europe to Asia, “reflecting the fact the European economy is becoming, the Southern part of the area, as costs go down and you see the Chinese government steering away from being an export and investment-led economy to being import and local domestic consumption and local wealth driven.”
Andersen noted ships returning to Asia from Europe do so with significantly fewer loaded containers. This underutilization means “a lot of opportunity to offer good rates to our export customers in Europe and growing that business,” he said. - Chris Dupin